The people first
Bangladesh is well known for an upsurge of humane energy in times of disaster
What a twist of time! The artists of Bangladesh are supposed to be busy making crafts with indigenous motifs to celebrate the upcoming Bengali New Year, but they are instead preparing personal protection equipment for doctors and other healthcare personnel. Meanwhile, the country's singers and dancers are supposed to be preparing for the New Year program, but they are instead raising funds for unemployed artists and the disadvantaged individuals who are going to bed without food. Many corporations are also coming forward to feed the hungry. The government is also leading the disaster management campaign from the front. Bangladesh is well known for this upsurge of humane energy in times of disaster. It is because of this fighting spirit that Bangladesh was able to rise to "prosperity from ashes."
Indeed, this is an extraordinary time in an uncertain world. The novel coronavirus crisis has already engulfed the world in just a few weeks. Bangladesh has always been credited as a resilient country. It is surprising to see Bangladesh –a frontier country facing climate change and other natural disasters so aptly – fumbling at times in front of this invisible enemy called Covid-19. In fact, the whole world is now shivering due to this human disaster. Even the most developed countries like the UK and US are faltering in addressing this menace. Apparently, the worst is yet to come in most parts of the world – including Bangladesh. Prime Minister Sheikh Hasina, in her latest video conference with the officials of Chittagong and Sylhet divisions, held on April 7, hinted that the month of April could see a greater spread of this virus.
The whole global economy and entirety of society are standing still due to shutdowns. The great global recession has already begun. In addition, the global health system is finding it extremely difficult to cope with this deluge. Bangladesh is no exception. In fact, Bangladesh has not been investing as much in public health infrastructure as its peers like Sri Lanka. Despite its early gains in low-cost solutions to health problems – in the forms of oral saline, universal immunisation and measures against child and maternal mortality – Bangladesh's overall health infrastructure looks vastly inadequate in facing the ongoing pandemic.
Also we took it easy, initially, and did not focus so deeply into the needed preparedness in terms of both raising awareness about effective social distancing – which, of course is not easy in a densely-populated country – plus improving the morale of our health personnel by providing them with the required personal protective equipment, testing kits and respiratory machines for treatment of this disease. However, things have vastly improved in recent days and the authorities are rising to the occasion, as demonstrated by the latest decision to ban religious congregations. This could have been done much earlier, but better late than never. Additionally, the prime minister's praise of doctors and health personnel – who are fighting this war as frontline soldiers – in addition to providing them the assurance of insurance packages is surely a welcome gesture.
Bangladesh's economy is also reeling under the grinding wheels of the shutdown with unprecedented short-term and long-term implications. The livelihood challenges are greater in Bangladesh as a vast number of people eke out their livings from their day-to-day earnings in the informal sector. The conventional response to economic fallouts from the closure of this sector is usually either inadequate or inappropriate. And, here too the PM's passionate call to the administration and wealthy individuals to come forward – to support vulnerable people from the informal sector as well as lower middle-class people who are shy about asking for alms – is right on target. Again, our two major sources of income from the formal sector, encompassing ready-made garments (RMG) industry exports and remittances, are severely threatened due to the spread of the virus across Europe and North America. Our imports also took a hit during the initial outbreak of the virus in China. We cannot expect much help from the outside world either as those who usually come to our aid are themselves in greater crisis.
In front of this challenging backdrop, we now have to strategise and work to ensure that people are able to cope with immediate shocks and ensure the resilience of the economy to deal with the medium to long-term shocks. For that matter, the messaging from the government has to be unambiguous, firm and on-target. No doubt, we also have enough strengths in our non-governmental and societal organisations. It is high time to take them on board and launch a national campaign to combat this disaster as a war. We did this in the 1971 War of Liberation, 1998 flood and recently the Rana Plaza tragedy. Fortunately, people are also volunteering to stand by healthcare workers, the hungry and the vulnerable. Let us further mobilize this social energy and, together with the state, we can certainly win this war. Luckily, we have a leader who can spur the nation into action – given her past record of disaster management – like her father Bangabandhu Sheikh Mujibur Rahman. She showed her determination when handling the Rohingya crisis, so boldly, just a couple of years ago. She remains to be the source of confidence and trust of the entire nation to face this challenge as well. She should continue to inspire the nation at this difficult time, focusing on the service providers of all kinds who are risking their lives to secure ours.
Despite some faltering, for example, in mishandling the flow of RMG workers and leaving them in a precarious condition, Bangladesh's government has been doing its best – given the unique nature of the crisis as well as the resource and time constraints. Additionally, the PM's recently-announced stimulus package, worth Tk72,750 crore, to protect the country's commerce and industry have reinforced the national aspirations for recovery of the economy once this health crisis is over. More significant is that the package looks inclusive as there is a separate move to cover the needs of small and medium enterprise entrepreneurs of both the industrial and service sectors. However, it all depends on how we actually operationalise this stimulus package – keeping in mind the particular needs of these battered entrepreneurs. Overall, the priority should be to secure our frontline soldiers – including healthcare sector personnel and essential service providers – and provide food security to about four million of the extreme poor, and the self-employed in the informal sector, in addition to other extreme poor.
Fortunately, the government has been revamping social safety net programs in both rural and urban areas. However, social distancing is creating a real barrier in reaching the hungry and unfed. Herein comes the best use of digital technology. The government, local government and NGOs can cooperate in running a Hunger Helpline and locate the hotspots to reach these unfed populations. Law enforcement, as already shown by the Chittagong Metropolitan Police, and local administration can become effective partners in our immediate battle against hunger. The CSR programs – as demonstrated by IDLC in partnership with NGOs and CBOs – can be also strategically rolled out to meet the immediate needs of the victims of this disaster who are mostly from the informal sector.
It was heartening to hear that the government intends to scale up social protection measures to address these needs. However, the granularity of the social protection measures to be taken is required. It is recommended that instead of providing in-kind support to the poor and marginalised, the government should focus more on cash support. Plus, it is now so much easier to reach those in need as most of them have access to mobile financial services. Additionally, I am happy to learn that Bangladesh Bank has already asked RMG factory owners to help all their workers open mobile financial services accounts for the transparent distribution of the Tk5,000 as wages for them. If done earnestly, this will have a positive impact on the market by bolstering aggregate demand. It must also be noted that we do not have much social protection for the urban poor and extreme poor. Hence, new and innovative programs need to be designed to address the needs of these groups, both now and later.
Agriculture is another area that requires special attention. Due to the ongoing shutdown, many farmers are not able to sell their produce at fair prices. The government should scale up procuring boro rice at a pre-declared price. Also, farmers need support for timely, mechanised boro harvesting as there may be a scarcity of migrant laborers. It should also make necessary arrangements so that the agricultural goods can as well flow freely and safely across the country during the current crisis. This will have two-pronged positive effects. On one hand, farmers will get fair prices – keeping the rural economy vibrant. On the other hand, incentivising agricultural production means the people remain engaged and adequately fed during the crisis. Poultry, fish and livestock farms must also be prioritised for accessing low cost SME loans as these are not only providing nutritional support but also employment to many.
Ensuring governance in the financial sector is of critical importance, to ensure that the stimulus supplied by the government for industry and commerce goes to the right people. Experts suggest prioritising employment-generating and productive enterprises when disbursing the subsidised loans. Special attention should also be paid to keep known habitual loan-defaulters and opportunists away.
It is believed that the stimulus package declared for large, small and medium enterprises will have to be given by the banks which will get a subsidy for about half of the interest rate from the central bank. One must, therefore, keep the tab open for the banks so that their liquidities do not dry up. This can be done in two ways. The SLR can be further reduced, along with refinancing the fund which they have disbursed every six months or so. The government can initially depend on expanding the balance sheet of the central bank – later complemented by the promised support from the World Bank, IMF and ADB. This needs to be clearly worked out with the central bank. Additional funding can also be mobilised by reorienting the focus of the budget towards social protection and public health support, plus channeling resources from the traditional energy and physical infrastructure projects by pruning and staggering the same.
Policymakers must incorporate the implications of Covid-19 in their long-term thinking as well. The 8th Five Year Plan, especially, must set macroeconomic priorities keeping the demand and supply side challenges, plus coping mechanisms arising out of this coronavirus crisis. The government must also consider some macro-prudential steps as already indicated. This should not create too much inflationary pressure, given the lowering oil prices in the international market and possible reduced imports in the coming days.
The point to be noted here is that the government will have to lead both the coping and recovery strategies. However, it must also make sure that skills, capacities and experiences of non-state actors are utilised in doing so. For example, for targeting the poor and ultra-poor, the government can definitely utilise the NGOs who have a proven track record of implementing targeted poverty reduction programs. The same is true for reaching out to informal sector entrepreneurs.
No doubt, there are a lot of reasons to be cautious during the Covid-19 pandemic. This indeed is the largest global crisis since the Second World War. However, we can also be optimistic as the government and non-state actors have already started to come forward with coping strategies. Yet, we must also be prudent about how to move further as we have limited time and resources to deal with this crisis. There is no scope for complacency here. Maybe tomorrow's Bangladesh will be more caring to nature and will be able to achieve sustainable development at a faster pace than others. When asked about the source of his strength, Bangabandhu once answered that his love for the people of his country is what drives him. If we succeed in following his teachings and are compassionate about the well-being of the people above all, then we, too, will be able to overcome the current crisis. In the past, we have always surprised other countries by turning challenges into opportunities. Why not again this time?
The writer is the Bangabandhu Chair Professor of Dhaka University and former Governor of Bangladesh Bank.